Signify announces Q2 and first half results for 2026

On July 24, global lighting leader Signify announced its performance report for the second quarter and first half of 2026.

The financial report shows that in the second quarter, the company achieved nominal sales of 1.332 billion euros, a decrease of 6.0% compared with the same period last year. Excluding exchange rate changes and integration effects, comparable sales fell 3.6%.

The profit side was affected by restructuring costs and weakness in the consumer business. Net profit in the second quarter was 17 million euros. Adjusted EBITA was 81 million euros, corresponding to a profit margin of 6.1%.

At the overall market level, the demand environment faced by Signify in the second quarter remains complex. CEO As Tempelman said at the earnings conference that the second quarter performance reflected both the mixed market environment and the progress in the early implementation of the new strategy.

The U.S. market has shown some resilience in the field of professional projects, while demand in Europe continues to be weak, and distribution channels are also under competitive pressure. In terms of exchange rates, the depreciation of the US dollar has brought about a negative currency effect of approximately 2.5%.

In terms of business, the professional lighting business, as the mainstay of Signify's revenue, achieved sales of 886 million euros in the second quarter, with comparable sales falling 2.5%. The segment's project sales in the United States and emerging markets maintained growth momentum, but weak demand in most regions and distribution channels in Europe offset the overall performance.

Thanks to continued price management and cost control, the adjusted EBITA profit margin of the professional lighting business remained at a relatively healthy level of 7.0%, which was only slightly narrowed by 40 basis points compared with the same period last year.

The consumer lighting business achieved sales of 285 million euros in the second quarter, with comparable sales down slightly by 0.2%. Although the actual sales performance on the consumer side is still strong, and Internet lighting products continue to have good terminal sales, retailers' continued destocking behavior has significantly affected inbound sales.

From a regional perspective, the Chinese market and Klite business performed weakly, while the Indian market continued to grow, partially offsetting the decline. Affected by cost inflation, insufficient dilution of fixed expenses and changes in product structure, the adjusted EBITA profit margin of this segment dropped significantly to 3.0% from 7.4% in the same period last year, becoming the most important factor affecting the company's overall profit performance.

OEM business achieved sales of 78 million euros in the second quarter, with comparable sales falling 12.0%, reflecting the continued downturn in the end market. However, as cost-cutting measures gradually took effect, the business's profit margin showed signs of improvement month-on-month, with the adjusted EBITA profit margin at 4.6%.

The traditional lighting business achieved sales of 72 million euros, with comparable sales falling 9.0%, mainly affected by the structural decline of general lighting, but special lighting achieved growth. The segment’s adjusted EBITA margin was 18.1%, which was better than expected.

Judging from the overall performance in the first half of the year, Signify achieved cumulative sales of 2.606 billion euros, and comparable sales fell by 4.4%. Adjusted EBITA was 164 million euros, corresponding to a profit margin of 6.3%. Free cash flow reached 81 million euros, of which 35 million euros was contributed in the second quarter, which was basically the same as the same period last year, showing the company's continued optimization in working capital management.

In terms of strategic advancement, Signify held a Capital Markets Day on June 23 and updated its mid-term financial outlook. The company has proposed a goal of achieving comparable sales growth of 0% to 1%, an adjusted EBITA margin of approximately 10%, and free cash flow accounting for 7% to 8% of sales by 2029.

At the same time, the company announced adjustments to the capital allocation framework, setting the annual cash dividend payout rate target at 40% to 50% of ongoing net income, and will no longer resume the stock repurchase plan launched in 2025.

Looking ahead to the full year, despite the pressure on profits in the first half of the year, Signify still confirmed that the adjusted EBITA profit margin target for fiscal year 2026 is 7.5% to 8.5%, and free cash flow accounts for approximately 6.5% to 7.5% of sales. The company stated that with the continued implementation of targeted price increase measures, in-depth advancement of cost actions, and the optimization of business structure in the second half of the year, the company is expected to usher in stronger profitability in the second half of the year.

Source: LEDinside